How to add background to squiffy? Also, can i change text color or add other visual effects?

If you want to change the default background, or the default text color, you can edit the style.css file. See this post for one way to do that.

If you just want to change the color of a word or two, you can use html in your Squiffy story, like this:

<span style="color:blue">This text will be blue.</span> This text will be the usual color.

See this page for an example you can try.